First Solar, ENB Solar Farm Online - Analyst Blog

By: Zacks.com

Posted: 5/8/2012 3:15:00 PM

Referenced Stocks: ENB;FSLR;NVE

First Solar, Inc.
(
FSLR
) and
Enbridge Inc.
(
ENB
) announced the completion of Silver State North Solar Project. The
utility-scale solar project built on public land is ready for
commercial operation. The 50-MW (AC) solar farm was developed and
constructed by First Solar in Clark County, Nevada, near the
community of Primm. Recently, in March 2012, Enbridge had acquired
the project for an undisclosed amount.

First Solar had utilized its advanced thin film photovoltaic
modules in constructing the project. Despite its acquisition by
Enbridge, First Solar will look after its operation and
maintenance.

Under a 25-year Power Purchase Agreement, the electricity
generated from the solar farm will be sold to
NV Energy, Inc.
(
NVE
). First Solar expects to recognize revenue from the 50-MW project
in the second quarter of 2012.

Besides generating profits, this will also help the company to
meet its renewable energy goals. Being an eco-friendly project, it
will produce renewable energy that will be sufficient to power
about 9,000 homes in Nevada. This is tantamount to displacing
approximately 42,000 metric tonnes of CO2 per year, equivalent to
about 8,000 cars off the road.

Despite focusing on overall development, the company could not
do well in the first quarter of 2012 due to low average selling
prices. Like its solar peers, the company is also witnessing an
oversupply of photovoltaic products leading to a steep drop in
ASPs. In the first quarter, its earnings fell below the Zacks
Consensus earnings per share estimate of 48 cents by 56 cents to
digest an adjusted loss of 8 cents. It also came in below the
year-ago quarterly EPS of $1.33.

First Solar designs, manufactures, and sells solar electric
power modules using a proprietary thin film semiconductor
technology. In order to counter the weak trend, the company is
focusing more on utility-scale electricity power projects.

Moreover the company is partially compensating for its drop in
margins by branching out its revenue base worldwide, implementing
technological enhancements and enforcing cost minimization. As a
caveat, the current macro scenario does not bode well for the solar
industry, which thrives mainly on subsidies and grants.

The company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
stock.